Labour market adjustments in Estonia during the global crisis

This article provides an assessment of labour market adjustments occurring in Estonia during the global crisis. As part of the so-called internal devaluation, the strategy followed was very successful in shrinking the unit labour costs, thus helping Estonian enterprises to gain international competitiveness. The whole gamut of tools available in terms of flexibility was used, at least in the worst time of the financial crisis: massive lay-offs, reduced working time and wage cuts. At mid-2011, Estonia stood as one of the most dynamic EU country to recover with exports growth. On the social side, however, the track record is not as positive: the purchasing power of workers has been reduced and unemployment still remains strong and persistent despite the economic recovery.